A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Ardmore Shipping Corp (NYSE:ASC) during the quarter.
Ardmore Shipping Corp (NYSE:ASC) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. At the end of this article, we will also compare Ardmore Shipping Corp (NYSE:ASC) to other stocks, including Halcon Resources Corp (NYSE:HK), Southwest Bancorp, Inc. (NASDAQ:OKSB), and Avid Technology, Inc. (NASDAQ:AVID) to get a better sense of its popularity.
According to most traders, hedge funds are viewed as worthless, old investment vehicles of the past. While there are over 8000 funds trading at the moment, We look at the leaders of this group, about 700 funds. It is estimated that this group of investors commands the lion’s share of the smart money’s total asset base, and by monitoring their matchless equity investments, Insider Monkey has come up with numerous investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a gander at the new action surrounding Ardmore Shipping Corp (NYSE:ASC).
What have hedge funds been doing with Ardmore Shipping Corp (NYSE:ASC)?
Heading into the fourth quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 29% from the second quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Ardmore Shipping Corp (NYSE:ASC), worth close to $12.7 million, amounting to 0.1% of its total 13F portfolio. Coming in second is Pyrrho Capital Management, led by Vishal Bhutani and Joshua Bederman, holding a $4.8 million position; 4.1% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass Brian Taylor’s Pine River Capital Management, Jon Bauer’s Contrarian Capital, and Renaissance Technologies.
Because Ardmore Shipping Corp (NYSE:ASC) has experienced a falling interest from hedge fund managers, it’s easy to see that there were a few hedge funds who were dropping their entire stakes by the end of the third quarter. Interestingly, Michael Lowenstein’s Kensico Capital cut the biggest stake of the 700 funds followed by Insider Monkey, worth close to $2.7 million in stock, and Mark Coe’s Coe Capital Management was right behind this move, as the fund dumped about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ardmore Shipping Corp (NYSE:ASC) but similarly valued. These stocks are Halcon Resources Corp (NYSE:HK), Southwest Bancorp, Inc. (NASDAQ:OKSB), Avid Technology, Inc. (NASDAQ:AVID), and National Storage Affiliates Trust (NYSE:NSA). This group of stocks’ market valuations matches Ardmore Shipping Corp (NYSE:ASC)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HK | 6 | 1414 | -1 |
| OKSB | 7 | 20803 | -1 |
| AVID | 19 | 104219 | 0 |
| NSA | 11 | 85632 | 4 |
As you can see, these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $29 million in Ardmore Shipping Corp (NYSE:ASC)’s case. Avid Technology, Inc. (NASDAQ:AVID) is the most popular stock in this table. On the other hand, Halcon Resources Corp (NYSE:HK) is the least popular one with only 6 bullish hedge fund positions. Ardmore Shipping Corp (NYSE:ASC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Avid Technology, Inc. (NASDAQ:AVID) might be a better candidate to consider a long position.
